FIFTH AMENDED AND RESTATED LOAN AGREEMENT
dated as of November 12, 1999
between
FIRST UNION NATIONAL BANK
and
BLONDER TONGUE LABORATORIES, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS.................................................................... 1
1.1 Definitions.................................................................... 1
ARTICLE II CREDIT ACCOMMODATIONS..........................................................10
2.1 The Line of Credit.............................................................10
2.2 Real Estate Loan...............................................................11
2.3 Term Loan......................................................................12
2.4 Interest.......................................................................12
2.5 Fees...........................................................................14
2.6 Mandatory Prepayments and Line of Credit Reductions............................15
2.7 Requirements of Law............................................................16
2.8 Determinations.................................................................16
2.9 Payments and Computations......................................................17
2.10 Prepayment and Repayment.......................................................17
ARTICLE III SECURITY.......................................................................18
3.1 Reaffirmation of Second Amended and Restated Security Agreement................18
3.2 Reaffirmation of Amended and Restated Patent Security Agreement................19
3.3 Reaffirmation of Amended and Restated Trademark Collateral Assignment..........19
3.4 Reaffirmation of Mortgage......................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BORROWER.................................19
4.1 Good Standing of the Borrower; Authorization...................................19
4.2 Compliance with Laws and Other Agreements......................................19
4.3 No Conflict; Governmental Approvals............................................20
4.4 Financial and Other Information Regarding Borrower.............................20
4.5 Taxes..........................................................................20
4.6 Encumbrances and Guaranties....................................................20
4.7 Material Adverse Changes.......................................................21
4.8 Margin Securities..............................................................21
4.9 ERISA..........................................................................21
4.10 Pending Litigation.............................................................21
4.11 Valid, Binding and Enforceable.................................................22
4.12 Priority of Security Interests.................................................22
4.13 Environmental Matters..........................................................22
4.14 Year 2000......................................................................22
4.15 No Untrue Statements...........................................................23
ARTICLE V CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS.................................23
5.1 Documents to be Delivered by the Borrower at Closing...........................23
5.2 Conditions Precedent to Making Line of Credit Loans............................24
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ARTICLE VI AFFIRMATIVE COVENANTS OF THE BORROWER..........................................24
6.1 Use of Proceeds................................................................24
6.2 Financial Statements...........................................................24
6.3 Ordinary Course of Business; Records...........................................26
6.4 Information for the Bank.......................................................26
6.5 Insurance......................................................................26
6.6 Maintenance....................................................................27
6.7 Taxes..........................................................................27
6.8 Leases.........................................................................27
6.9 Corporate Existence; Certain Rights; Laws......................................27
6.10 Notice of Litigation or Other Proceedings......................................27
6.11 Indebtedness...................................................................28
6.12 Notice of Events of Default....................................................28
6.13 ERISA..........................................................................28
6.14 Deposit Accounts...............................................................28
6.15 Management.....................................................................28
6.16 Compliance with Environmental Laws.............................................29
6.17 Interest Rate Protection.......................................................29
6.18 Further Actions................................................................29
6.19 Material Adverse Change........................................................29
6.20 Meeting Regarding Projections..................................................29
ARTICLE VII NEGATIVE COVENANTS.............................................................29
7.1 Financial Covenants............................................................29
7.2 Fundamental Corporate Changes..................................................30
7.3 Indebtedness...................................................................30
7.4 Encumbrances...................................................................31
7.5 Guaranties.....................................................................31
7.6 Sales and Lease-Backs..........................................................32
7.7 Loans, Investments.............................................................32
7.8 Change in Business.............................................................32
7.9 Sale or Discount of Receivables................................................32
7.10 Prepayment of Indebtedness.....................................................32
7.11 Limitation on Dividends; Stock Repurchases.....................................32
7.12 ERISA..........................................................................32
7.13 Compliance with Federal Reserve Board Regulations..............................33
7.14 Blonder International and Vu-Tech Communications, Inc..........................33
ARTICLE VIII EVENTS OF DEFAULT..............................................................33
8.1 Borrower's Failure to Pay......................................................33
8.2 Breach of Covenants or Conditions..............................................33
8.3 Defaults in Other Agreements...................................................34
8.4 Agreements Invalid.............................................................34
8.5 False Warranties; Breach of Representations....................................34
8.6 Judgments......................................................................34
8.7 Bankruptcy or Insolvency of the Borrower or Other Loan Parties.................34
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ARTICLE IX REMEDIES.......................................................................35
9.1 Further Advances; Acceleration; Setoff.........................................35
9.2 Further Remedies...............................................................36
ARTICLE X MISCELLANEOUS..................................................................36
10.1 Remedies Cumulative; No Waiver.................................................36
10.2 Notices........................................................................36
10.3 Costs, Expenses and Attorneys' Fees............................................37
10.4 Survival of Covenants..........................................................37
10.5 Counterparts; Effectiveness....................................................38
10.6 Headings.......................................................................38
10.7 Payment Due On A Day Other Than A Business Day.................................38
10.8 Judicial Proceedings...........................................................38
10.9 Governing Law..................................................................38
10.10 Integration....................................................................38
10.11 Amendment and Waiver...........................................................39
10.12 Successors and Assigns.........................................................39
10.13 Severability of Provisions.....................................................39
10.14 Consent to Jurisdiction and Service of Process.................................39
10.15 Indemnification................................................................40
10.16 Arbitration Provisions.........................................................40
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FIFTH AMENDED AND RESTATED LOAN AGREEMENT
This FIFTH AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"), dated as
of November 12,1999 is between FIRST UNION NATIONAL BANK, a national banking
association (the "Bank"), and BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation (the "Borrower").
BACKGROUND
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A. The Bank and the Borrower are parties to a Fourth Amended and Restated
Loan Agreement dated February 1, 1999 (as amended, modified and/or extended, the
"Existing Loan Agreement").
B. The Bank and the Borrower now desire to amend and restate in their
entirety the terms and conditions of the Existing Loan Agreement pursuant to the
terms hereof and set forth the terms and conditions upon which the Bank will
continue to make available to the Borrower certain credit facilities to be used
for the purposes specified in this Agreement. Accordingly, the Bank and the
Borrower, each intending to be legally bound hereby, agree as follows:
ARTICLE I DEFINITIONS
1.1 Definitions.
Terms used herein without definition that are defined in the Uniform
Commercial Code shall have the meanings ascribed to them therein, unless the
context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Account" shall have the meaning given to that term in the Uniform
Commercial Code and, in addition, shall include any right to payment for goods
sold or leased or services rendered which is evidenced by an instrument or
chattel paper.
"Account Debtor" shall mean a Person who is obligated under any Account.
"Accounts Receivable Report" shall have the meaning set forth in Section
6.2(c) of this Agreement.
"Accounts Payable Report" shall have the meaning set forth in Section
6.2(c) of this Agreement.
"Affiliate" shall mean any Subsidiary of the Borrower and any Person or
entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with the Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, modifications and supplements hereto as may be in effect from time
to time.
"Applicable Base Rate Line of Credit Margin" shall have the meaning set
forth in Section 2.4(b) of this Agreement.
"Applicable Base Rate Term Loan Margin" shall have the meaning set forth in
Section 2.4(b) of this Agreement.
"Applicable Law" shall mean all applicable provisions of (i) constitutions,
statutes, rules, regulations and orders of governmental authorities of any kind
having jurisdiction over the Bank or the Borrower, (ii) authorizations,
consents, approvals, and licenses of such governmental authorities, (iii)
Judgments, and (iv) common law and equity.
"Applicable LIBOR Line of Credit Margin" shall have the meaning set forth
in Section 2.4(b) of this Agreement.
"Applicable LIBOR Term Loan Margin" shall have the meaning set forth in
Section 2.4(b) of this Agreement.
"Bank" shall have the meaning specified in the initial paragraph of this
Agreement, together with its successors and assigns.
"Base Rate" shall mean the greater of (i) the Bank's Prime Rate, or (ii)
the overnight federal funds rate plus 0.50%. The Bank's Prime Rate is an index
or base rate announced from time to time by the Bank as its "Prime Rate" and is
not its lowest or best rate charged to its customers.
"Blonder International" shall mean Blonder Tongue International, Inc., a
Delaware corporation, together with its successors and assigns.
"Borrower" shall have the meaning specified in the initial paragraph of
this Agreement, together with its successors and assigns.
"Borrowing Base" shall mean the sum of (i) 75% of Eligible Accounts, and
(ii) the lesser of (A) 20% of Eligible Inventory, or (B) 50% of the sum of (1)
75% of Eligible Accounts and (2) 20% of Eligible Inventory.
"Borrowing Base and Loan Report" shall have the meaning set forth in
Section 6.2(c) of this Agreement.
"Business Day" shall mean any day upon which banks are open for business in
New Jersey, Pennsylvania and in London, U.K.
"Capital Lease" shall mean any lease of property which, in accordance with
GAAP, should be capitalized on the lessee's balance sheet.
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"Capital Lease Obligation" shall mean the amount of the liability which,
according to GAAP, should be capitalized or disclosed with respect to a Capital
Lease.
"Closing" shall mean the execution and delivery to the Bank of all of the
documents and instruments required by the terms of this Agreement and the
closing of the transactions contemplated by this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning set forth in the Second Amended and
Restated Security Agreement.
"Compliance Certificate" shall have the meaning set forth in Section
6.2(g).
"Default" shall mean any Event of Default, whether or not any requirement
for the giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall have the meaning set forth in Section 7.1(a) of this
Agreement.
"Eligible Accounts" shall mean all Accounts evidenced by an invoice (valued
at the face amount of such invoice, less maximum discounts, credits and
allowances which may be taken by Account Debtors on such Accounts, and net of
any sales tax, finance charges or late payment charges or included in the
invoiced amount) created or acquired by Borrower arising from the sale of
Inventory and/or the provision of certain services in Borrower's ordinary course
of business (as approved by Bank) in which Bank has a first priority, perfected
security interest (subject only to Permitted Liens), but excluding (a) Accounts
outstanding for more than ninety (90) days from the date of original invoice;
(b) all Accounts owed by an Account Debtor if more than fifty percent (50%) of
the Accounts owed by such Account Debtor to Borrower are deemed ineligible
hereunder; (c) Accounts owing from any Affiliate of Borrower; (d) Accounts owed
by a creditor of Borrower to the extent of the amount of the indebtedness of
Borrower to such creditor; (e) Accounts which are in dispute or subject to any
counterclaim, contra-account or offset; (f) Accounts owing by any Account Debtor
which is not solvent; (g) Accounts arising from a sale on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or similar basis
or which is subject to repurchase, return, rejection, repossession, loss or
damage; (h) Accounts owed by an Account Debtor located outside of the
continental United States of America, unless in Bank's sole and absolute
discretion, such Account is supported by a letter of credit or credit insurance
assigned to Bank and which is issued by a financial institution and in an amount
which is acceptable to Bank in its sole and absolute discretion; (i) Accounts
owed by the United States of America or other governmental or quasi-governmental
unit, agency or subdivision unless Borrower shall have complied with all
applicable federal and state assignment of claims laws; (j) Accounts as to which
the goods giving rise to the Account have not been delivered to and accepted by
the Account Debtor or the service giving rise to the Account has not been
completely performed or which do not represent a final sale; (k) Accounts for
which the total amounts owed thereunder by an Account Debtor (together with its
Affiliates) exceeds a credit limit established by Bank in its sole and absolute
discretion (to the extent of such excess); (l) Accounts evidenced by a note or
other instrument or chattel paper or reduced to judgment;
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(m) Accounts for which the total of all Accounts from an Account Debtor
(together with the Affiliates of the Account Debtor) exceed ten percent (10%) of
the total Accounts of Borrower (to the extent of such excess); (n) Accounts
which, by contract, subrogation, mechanics' lien laws or otherwise, are subject
to claims by Borrower's creditors or other third parties or which are owed by
Account Debtors as to whom any creditor of Borrower (including any bonding
company) has lien or retainage rights; (o) Accounts the validity,
collectibility, or amount of which is determined in good faith by Borrower or
Bank to be doubtful; (p) Accounts owed by an Account Debtor which is located in
a jurisdiction where Borrower is required to qualify to transact business or to
file reports, unless Borrower has so qualified or filed; (q) Accounts owed by an
Account Debtor who disputes the liability therefor; (r) Accounts owed by an
Account Debtor that shall be the subject of any proceeding of the type described
in Section 8.7; and (s) any other Account which Bank otherwise in its sole and
absolute discretion deems to be ineligible and with respect to which Bank has
provided ten (10) Business Days' prior written notice to the Borrower that it
deems such Account to be ineligible. No Account shall be an Eligible Account if
any representation, warranty or covenant herein relating thereto shall be
untrue, misleading or in default. Bank may determine, on a daily basis, whether
any Account constitutes an Eligible Account, and if an Eligible Account
subsequently becomes ineligible its ineligibility shall be immediate.
"Eligible Inventory" shall mean all Inventory acquired by Borrower in the
ordinary course of its business as presently conducted consisting of raw
materials (excluding Inventory for which any processing has occurred sometimes
refer-red to as "raw materials assembled") and finished goods in which Bank has
a first priority, perfected security interest (subject to Permitted Liens),
valued at the lower of cost or market on a first-in, first-out basis minus any
Inventory reserves, but excluding (a) damaged, obsolete or unmerchantable
Inventory, (b) Inventory not owned legally and beneficially by Borrower, (c)
consigned Inventory, (d) Inventory owned by the Borrower for more than 12
months, (e) Inventory not located at Borrower's property in Old Bridge, New
Jersey, (f) Inventory in-transit; provided, however, that in-transit Inventory
may be deemed Eligible Inventory if Borrower demonstrates that (1) Bank has a
perfected first priority security interest in such Inventory, (2) the Inventory
has been paid for in full (including all applicable freight charges), and (3)
the Inventory is fully insured against any casualty loss, (g) Inventory which
are "supplies", (h) "warranty" Inventory, (i) any Inventory with regard to which
a representation, warranty or covenant is untrue, misleading or in default), and
(j) which Bank otherwise in its sole and absolute discretion deems to be
ineligible and with respect to which Bank has provided ten (10) Business Days'
prior written notice to the Borrower that it deems such Inventory to be
ineligible. Bank may determine, on a daily basis, whether any Inventory
constitutes Eligible Inventory, and if Eligible Inventory subsequently becomes
ineligible its ineligibility shall be immediate. It is presently estimated that
the Inventory owned by the Borrower for more than 12 months has a value of
$204,000. That amount will be used in calculating the Borrowing Base until (x)
the Bank determines that the value of Inventory owned by the Borrower for more
than 12 months is greater, or (y) the Borrower demonstrates that the value of
Inventory owned by the Borrower for more than 12 months is less and that the
Borrower has established reasonable procedures for determining those values on
an ongoing basis.
"Encumbrance" shall mean, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor,
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lessor, lender to, or other secured party of the Person under any
conditional sale or other title retention agreement or Capital Lease with
respect to, any property or asset of the Person.
"Environmental Laws" shall mean all provisions of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss.9601 et
seq., as amended by the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499, 100 Stat. 1613 (October 17, 1986), the Resource Conservation
and Recovery Act, 42 U.S.C. ss.ss.6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss.1801 et seq., the Clean Water Act, 33 U.S.C.
ss.ss.1251 et seq., the Clean Air Act, 42 U.S.C. ss.ss.7401 et seq., the Storage
Tank and Spill Prevention Act, 35 P.S. ss.ss.6021.101 et seq., the Solid Waste
Management Act, 35 P. S. ss.ss.6018.101 et seq., the Clean Streams Law, 35 P.S.
ss.ss.691.1 et seq., the Hazardous Sites Cleanup Act, 35 P.S. ss.ss.6021.101 et
seq., and all other federal, state and local legal requirements pertaining to
the environment or regulating or restricting the use, transfer, storage or
disposal of Hazardous Materials and applicable to the Borrower or its business,
operations or assets.
"ERISA" shall mean the federal Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall have the meaning set forth in ARTICLE VIII of this
Agreement.
"Extraordinary Receipts" shall mean any payments exceeding $50,000 or
series of related payments which in the aggregate total more than $100,000,
which payment or payments are received by the Borrower outside of the ordinary
course of business, including indemnity payments and payment on account of
insurance.
"Federal Reserve Board" shall mean the Board of Governors of the United
States Federal Reserve System.
"Financial Statements" shall have the meaning set forth in Section 4.4(a)
of this Agreement.
"Fixed Charge Ratio" shall have the meaning set forth in Section 7.1(b) of
this Agreement.
"GAAP" shall mean generally accepted accounting principles, as in effect at
the time of application to the provisions hereof, and consistently applied.
"Guarantor" shall mean any Person who guarantees the payment and
performance of all or any part of the Obligations.
"Guaranty" shall mean any guaranty or agreement to be a surety or other
contingent liability (other than any endorsement for collection or deposit in
the ordinary course of business), direct or indirect, with respect to any
obligation of another Person.
"Hazardous Materials" shall mean all materials of any kind which are
flammable, explosive, toxic, radioactive or otherwise hazardous to animal or
plant life or the environment, including, without limitation, "hazardous wastes"
"hazardous substances" and "contaminants," as such terms are defined by
Environmental Laws.
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"Indebtedness" shall mean any obligation for borrowed money, including,
without limitation: (1) any obligation owed for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business; (ii) any Capital Lease Obligation; and (iii) any
reimbursement obligations and other obligations under any letter of credit,
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device, or any forward sale or purchase agreement
for foreign currencies.
"Interest Period" shall mean the period commencing on the effective date of
any election to have all or a portion of the amounts outstanding under the Line
of Credit or the Term Loan bear interest at a rate determined with respect to
the LIBOR and ending one, two or three months thereafter, as selected by the
Borrower in its notice given with respect thereto; provided (i) if any Interest
Period would otherwise end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Business Day; (ii) no Interest Period for amounts which are part of
the Line of Credit may extend beyond the Termination Date; (iii) no Interest
Period for amounts which are part of the Term Loan may extend beyond the Term
Loan Maturity Date; (iv) no Interest Period for amounts which are part of the
Term Loan may extend beyond a Term Loan Payment Date if the aggregate amount of
all of the amounts for which interest is determined in relation to the LIBOR
which are part of the Term Loan and are then scheduled to be outstanding on such
Term Loan Payment Date exceed the principal balance scheduled to be outstanding
after payment on such date is made; and (v) any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Interest Rate Tranche" shall have the meaning assigned to that term in
Section 2.4(a) hereof.
"Inventory" shall mean all goods, merchandise and other personal property
which is held for sale or lease or furnished or to be furnished under a contract
for services or raw materials, and all work in process and materials used or
consumed or to be used or consumed in a Person's business, and in addition,
includes all property included in the definition of "inventory" as used in the
Code.
"Inventory Report" shall have the meaning set forth in Section 6.2(c) of
this Agreement.
"Judgment" shall have the meaning set forth in Section 8.6 of this
Agreement.
"Letter of Credit Sublimit" shall have the meaning set forth in Section
2.1(b)(i) of this Agreement.
"Letters of Credit" shall have the meaning set forth in Section 2.1(b)(i)
of this Agreement.
"Leverage Ratio" shall have the meaning set forth in Section 7.1(a) of this
Agreement.
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"LIBO Base Rate" shall mean for each Interest Period the interest rate
(expressed as a decimal) for deposits in Dollars for such Interest Period, which
rate appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the
date that is two Business Days prior to the first Business Day of such Interest
Period. (If such rate does not appear on the Telerate Page 3750, the rate
utilized shall be the rate which appears, or if more than one such rate appears,
the average of the rates which appear on the Reuters Screen LIBO Page as of
11:00 a.m., London time, on the day that is two Business Days prior to such
date).
"LIBOR" shall mean with respect to each day during each Interest Period
pertaining to an election of the Borrower to have interest with respect to an
amount outstanding bear interest at the LIBOR, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
LIBO Base Rate
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1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirement" shall mean the percentage amount (expressed as
a decimal) of reserves that applicable United States laws would require the Bank
to maintain with respect to liabilities incurred on the London Interbank Market
including, without limitation, reserves required under Regulation D of the Board
of Governors of the Federal Reserve System for euro-currency liabilities (as
defined in such regulation and deemed, for purposes of this Agreement, to
include the Bank's liabilities incurred on the London Interbank Market) without
benefit of or credit for pro-ration, exception, or offsets otherwise available
from time to time under such regulation.
"Line of Credit" shall mean the line of credit from the Bank to the
Borrower established pursuant to Section 2.1 of this Agreement.
"Line of Credit Commitment" shall have the meaning set forth in Section 2.1
of this Agreement.
"Line of Credit Loans" shall mean the loans made by the Bank to the
Borrower pursuant to the Line of Credit.
"Line of Credit Note" shall have the meaning set forth in Section 2.1 of
this Agreement, together with all replacements, amendments and renewals thereof.
"Loan Documents" shall mean this Agreement, the Second Amended and Restated
Security Agreement, the Notes, the Mortgage, the Amended and Restated Patent
Collateral Assignment, the Amended and Restated Trademark Collateral Assignment,
the Life Insurance Assignments and all agreements, amendments, certificates,
financing statements, schedules, reports, notices, and exhibits now or hereafter
executed or delivered in connection with any of the foregoing, as may be in
effect from time to time, provided, however, that the term "Loan Documents"
shall not include any Swap Agreements.
"Loans" shall mean the Line of Credit Loans, the Real Estate Loan and the
Term Loan.
"Make Whole Fee" shall have the meaning set forth in Section 2.5(e) of this
Agreement.
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"Make Whole Rate" shall have the meaning set forth in Section 2.5(e) of
this Agreement.
"Mortgage" shall mean the Mortgage, Assignment of Leases, and Security
Agreement dated as of May 23, 1996 from the Borrower to the Bank, and
encumbering real and personal property located generally at Middlesex County,
New Jersey, as modified by the Modification of Mortgage, Assignment of Leases
and Security Agreement dated as of February 1, 1999 and any further amendments
and supplements thereto.
"Net Cash Proceeds" of any Person shall mean the amount of any cash
proceeds received by such Person from any sale of assets of such Person other
than in the ordinary course of business minus any normal and customary fees and
expenses related to such sale and any incremental amount of taxes payable or
estimated to be payable by such Person as a result of such sale.
"Notes" shall mean the Line of Credit Note, the Real Estate Loan Note, the
Term Note and all replacements, amendments, extensions and renewals thereof.
"Obligations" shall mean the obligations of the Borrower: (i) to pay the
principal, interest, commitment fees and any other liabilities of the Borrower
to the Bank under this Agreement, the Swap Agreement and the other Loan
Documents in accordance with the terms thereof; (ii) to satisfy all of the other
direct or indirect liabilities of the Borrower to the Bank, whether hereunder or
otherwise, whether now existing or hereafter incurred, whether or not evidenced
by any note or other instrument, matured or unmatured, direct, absolute or
contingent, joint or several, including any extensions, modifications, renewals
thereof and substitutions therefor; (iii) to repay the Bank all amounts advanced
by the Bank hereunder or otherwise on behalf of the Borrower, including, but
without limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any Collateral; and (iv) to reimburse
the Bank, on demand, for all of the Bank's expenses and costs, including the
reasonable fees and expenses of its counsel, in connection with the negotiation,
preparation, administration, amendment, modification, or enforcement of this
Agreement and the documents required hereunder, including all amounts payable
under Section 10.3 hereof.
"Other Loan Parties" shall mean any Guarantor, together with their
successors or assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court or
governmental or political subdivision or agency thereof.
"Projections" shall mean Borrower's forecasted consolidated and
consolidating (i) balance sheets, (ii) profit and loss statements, (iii) cash
flow statements, and (iv) capitalization statements, all prepared on a month by
month basis and on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"Real Estate Loan" shall mean the loan referenced in Section 2.2 of this
Agreement.
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"Real Estate Loan Note" shall have the meaning set forth in Section 2.2 of
this Agreement.
"Regulatory Change" shall mean (a) the enactment or effectuation after the
date of this Agreement of any new, or change in any existing, Applicable Law,
(b) the adoption after such date of any new, or the adoption or other
effectuation after such date of any change in any existing, interpretation,
directive or request (whether or not having the force of law), or (c) any change
after such date in the administration or enforcement of any Applicable Law to
which the Bank is subject. As used in this definition, the "effectuation" of a
change shall include, without limitation, that consisting of or resulting from a
determination of a court or regulatory authority.
"Remaining Term" shall have the meaning set forth in Section 2.5(e) of this
Agreement.
"Required Reduction Amount" shall have the meaning set forth in Section 2.6
of this Agreement.
"Securities Issuance Proceeds" shall mean the proceeds from the issuance of
equity or debt of the Borrower less any reasonable and customary fees, costs and
expenses related to such issuance.
"Senior Debt" shall have the meaning set forth in Section 7. 1 (a) of this
Agreement.
"Stockholder's Equity" has the meaning assigned under GAAP.
"Subsidiary" shall mean, as to any designated corporation, any corporation,
the outstanding shares of which having sufficient voting power (not depending on
the happening of a contingency) to elect at least a majority of the members of
its board of directors, are at the time owned by the designated corporation.
"Swap Agreement" shall mean any swap agreement (as defined in 11 USCss.
101) between the Borrower and the Bank.
"Tangible Net Worth" shall have the meaning set forth in Section 7.1(c) of
this Agreement.
"Tax" shall mean any federal, state or foreign tax, assessment or other
governmental levy or duty or other charge (including any withholding tax) upon a
person or entity or upon its assets, revenues, income or profits, other than
income and franchise taxes imposed upon the Bank by the jurisdictions (or any
political subdivision thereof) in which the Bank or any office of the Bank is
located.
"Term Loan" shall have the meaning set forth in Section 2.3(a) of this
Agreement.
"Term Loan Maturity Date" shall have the meaning set forth in Section
2.3(a) of this Agreement.
"Term Loan Payment Date" shall have the meaning set forth in Section 2.3(a)
of this Agreement.
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"Term Note" shall have the meaning set forth in Section 2.3(b) of this
Agreement.
"Termination Date" shall have the meaning set forth in Section 2.1 of this
Agreement.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of New
Jersey as codified at l2 NJSA ss.12A-1-10l et seq., as in effect on the date of
this Agreement.
ARTICLE II CREDIT ACCOMMODATIONS
2.1 The Line of Credit.
The Bank hereby makes available to the Borrower upon the terms and
conditions set forth herein, a Line of Credit in the maximum principal amount of
the lesser of (i) $7,500,000 or such lesser amount as determined in accordance
with this Agreement (the "Line of Credit Commitment"), and (ii) the then current
Borrowing Base.
(a) Generally.
At any time and from time to time during the period ending on June 30, 2000
(the "Termination Date"), upon the request of the Borrower, Bank shall provide
to the Borrower a loan or loans in multiples of $100,000, which shall be used by
the Borrower for working capital only. The indebtedness, if any, outstanding
under the Existing Line of Credit Note shall not be repaid or discharged, but
shall be deemed outstanding under the Line of Credit and shall be evidenced by
the Line of Credit Note. The Borrower may use the Line of Credit during the
period referred to above by borrowing, repaying and reborrowing in accordance
with the terms of this Agreement. The aggregate outstanding principal under the
Line of Credit at any time shall not exceed the Line of Credit Commitment. If,
at any time, the aggregate outstanding principal under the Line of Credit
exceeds the lesser of the Line of Credit Commitment or the Borrowing Base, then,
without any requirement of demand or notice from the Bank, the Borrower shall
immediately pay to the Bank the amount of such excess. Upon the Termination
Date, the Bank's commitment to make Line of Credit Loans shall terminate, all
Line of Credit Loans shall immediately mature and all Obligations under the Line
of Credit Loans shall be immediately due and payable in full. The Borrower shall
notify, by use of the form attached hereto as Exhibit A, the Bank of each
proposed borrowing under the Line of Credit not later than 10:00 a.m., Eastern
Standard or Daylight Savings as then in effect in Philadelphia, Pennsylvania
time on the day of the proposed borrowing.
(b) Letters of Credit.
(i) In addition to making loans to the Borrower under the Line of Credit
as provided in Section 2.1(a) hereof, the Bank shall, upon the request of the
Borrower and subject to the terms of this Agreement, also issue one or more
letters of credit ("Letters of Credit") for the account of the Borrower up to
an aggregate amount not to exceed $1,000,000 (the "Letter of Credit Sublimit").
All amounts drawn under Letters of Credit shall be deemed to be loans made under
the Line of Credit and evidenced by the Line of Credit Note, and the amount
available to be borrowed under the Line of Credit shall be reduced by the
aggregate amounts drawn and available to be drawn at any time under all
outstanding Letters of Credit. In no event shall the aggregate amount available
to be drawn on all outstanding Letters of Credit plus the outstanding
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principal balance of Line of Credit Loans exceed the Line of Credit Commitment.
The duration of any Letters of Credit shall not extend beyond the Termination
Date without the written consent of the Bank.
(ii) Subject to the provisions of Section 2.1(b)(i), the Bank shall
issue Letters of Credit for the account of the Borrower, provided that the
Borrower (i) provides a written request for each such Letter of Credit
specifying the terms thereof, including, without limitation, the amount and
the name and address of the beneficiary of such Letter of Credit; (ii)
executes and delivers to the Bank an application for each such Letter of
Credit pursuant to the form provided for such purpose by the Bank; and (iii)
executes and delivers to the Bank such other documents and instruments which
the Bank, in its sole and absolute discretion, deems reasonable and
necessary.
(c) Line of Credit Note.
The obligations of the Borrower to repay the aggregate outstanding
principal under the Line of Credit and to pay accrued interest thereon shall
be evidenced by a Fifth Amended and Restated Line of Credit Note, in form and
substance satisfactory to the Bank, to be executed and delivered to the Bank
concurrently with the execution and delivery of this Agreement (the "Line of
Credit Note"). The Bank agrees to return to the Borrower the Fourth Amended
and Restated Line of Credit Note marked "cancelled."
(d) Termination or Permanent Reduction of Commitments.
The Borrower shall have the right, upon not less than five Business
Days' notice to the Bank, to terminate the Line of Credit or, from time to
time, reduce the amount of the Line of Credit to an amount not less than the
aggregate principal amount of the Line of Credit Loans then outstanding after
giving effect to any contemporaneous prepayment thereof. Any termination of
the Line of Credit shall be accompanied by the prepayment in full of the Line
of Credit together with accrued interest thereon to the date of such
prepayment and the payment of any unpaid commitment fee and any other fees
and commissions then accrued hereunder and any other amounts payable
hereunder. Any such reduction shall be in an amount of $ 1,000,000 or a whole
multiple thereof.
2.2 Real Estate Loan.
The Bank has made available to the Borrower a loan (the "Real Estate
Loan") in the initial principal amount of $2,800,000 the proceeds of which
were used to refinance the acquisition and/or improvement of certain land and
buildings and other improvements thereon owned by the Borrower and located at
One ▇▇▇▇ ▇▇▇▇▇ Road, Old Bridge, New Jersey. The Borrower has repaid and
shall continue to repay the obligations under that loan in monthly installments
of principal in the amount of $15,555.56 until April 1, 2006. On May 1, 2006
the Borrower shall make a final payment consisting of the entire remaining
principal balance of the loan, together with all accrued interest thereon.
Obligations of the Borrower to the Bank shall be evidenced by the Real
Estate Loan Note dated May 23, 1996 made by the Borrower in favor of the Bank
as amended by the Allonge to Real Estate Note dated September 26, 1996, the
Second
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Allonge to Real Estate Note dated as of February 1, 1999 and the Third
Allonge to Real Estate Note of even date (the "Real Estate Loan Note").
2.3 Term Loan.
(a) General.
Subject to the terms and conditions hereof, the Lender hereby agrees to
make a term loan to the Borrower in an amount of $17,100,001.18 (the "Term
Loan"). The Term Loan will be repaid in consecutive monthly principal
payments of $316,666.67 payable on the first Business Day of each month
beginning on December 1, 1999 (the date of each such payment being a "Term
Loan Payment Date") and a final principal payment of any amounts due under
this Agreement which remain unpaid on June 30, 2002 (the "Term Loan Maturity
Date"). The proceeds of the Term Loan will be used to refinance the amounts
owed under the Scientific Atlanta Loan, as that term is defined in the Fourth
Amended and Restated Loan Agreement.
(b) Note.
The obligations of the Borrower to repay the Term Loan will be evidenced
by a term note (the "Term Note") in the form attached hereto as Exhibit B.
The Bank agrees to return to the Borrower the note evidencing the Scientific
Atlanta Loan marked "cancelled".
2.4 Interest.
(a) Rates.
Interest shall accrue on all principal amounts outstanding under the
Real Estate Loan at the Base Rate. Interest shall accrue on all principal
amounts outstanding under the Line of Credit and the Term Loan as follows:
(i) in the absence of an effective election to the contrary any amounts
outstanding under (A) the Line of Credit shall each day bear interest at the
Base Rate plus the Applicable Line of Credit Base Rate Margin, and (B) the
Term Loan shall each day bear interest at the Base Rate plus the Applicable
Term Loan Base Rate Margin, and (ii) the Borrower may, from time to time, in
connection with a request for an advance under the Line of Credit, the
initial funding of the Term Loan or otherwise, elect that all or some portion
of the amounts outstanding under the Line of Credit or the Term Loan shall
bear interest during an Interest Period of one, two or three months at (A) in
the case of the Line of Credit, LIBOR plus the Applicable Line of Credit
LIBOR Margin, or (B) in the case of the Term Loan, LIBOR plus the Applicable
Term Loan LIBOR Margin. Each portion of the Line of Credit or Term Loan with
respect to which the amounts outstanding bear interest determined in relation
to the Base Rate or for which the Borrower has made an interest rate election
shall be referred to as an "Interest Rate Tranche". The minimum amount of any
Interest Rate Tranche for which the Borrower may make an interest rate
election shall be $500,000.00. No more than five Interest Rate Tranches may
be outstanding at any one time. The Borrower must give notice of an interest
rate election by 11:00 a.m., Philadelphia time, at least three Business Days
before the beginning of the requested Interest Period. In such notice the
Borrower must state the requested (i) beginning and length of the Interest
Period, (ii) the amount which is to bear interest determined with respect to
LIBOR, and (iii) whether such amount is part of the Line of Credit or the
Term Loan. In the event that such election is made in connection with a
request for an
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advance under the Line of Credit, notwithstanding anything in this
Agreement to the contrary, notice requesting such advance must be received by
11:00 a.m., Philadelphia time, at least three Business Days before such
advance is to be made.
(b) Applicable Margins.
The Applicable Base Rate Line of Credit Margin, the Applicable Base Rate
Term Loan Margin, the Applicable LIBOR Line of Credit Margin and the
Applicable LIBOR Term Loan Margin shall be determined and adjusted each
fiscal quarter based upon the Borrower's Leverage Ratio, as follows:
---------------------------------------------------------------------------------------------------------
Applicable Base Applicable Base Applicable Applicable
Rate Line of Rate Term Loan LIBOR Line of LIBOR Term
Leverage Ratio Credit Margin Margin Credit Margin Loan Margin
---------------------------------------------------------------------------------------------------------
Greater than or 0.625% 0.875% 2.625% 2.875%
equal to 3.0 to 1
---------------------------------------------------------------------------------------------------------
Less than 3.0 to 1 0.500% 0.750% 2.500% 2.750%
and greater than or
equal to 2.5 to 1
---------------------------------------------------------------------------------------------------------
Less than 2.5 to 1 0.250% 0.500% 2.250% 2.500%
and greater than or
equal to 2.0 to 1
---------------------------------------------------------------------------------------------------------
Less than 2.0 to 1 0 0.250% 2.000% 2.250%
greater than or
equal to 1.5 to 1
---------------------------------------------------------------------------------------------------------
Less than 1.5 to 1 0 0 1.750% 2.000%
and greater than or
equal to 1.0 to 1
---------------------------------------------------------------------------------------------------------
Less than 1.0 to 1 0 0 1.500% 1.750%
---------------------------------------------------------------------------------------------------------
Any adjustment to the Interest Rate Margins shall be effective five
Business Days after the receipt of the quarterly Compliance Certificate.
(c) Default Interest Rates.
If a Default or an Event of Default shall occur and be continuing all
amounts due under the Loan Documents shall bear interest at a rate per annum
which is the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection plus 2% from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
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(d) Interest Payments.
Interest on amounts bearing interest at a rate determined by LIBOR shall
be payable on the last day of the applicable Interest Period. Interest on all
other amounts shall be payable monthly, in arrears, on the first Business Day
of each month.
(e) Computation of Interest and Fees.
Interest on Loans or commitment fees shall be calculated on the basis of
a 360 day year for the actual days elapsed. Any change in the interest rate
resulting from a change in the Base Rate or the LIBOR Reserve Requirement
shall become effective as of the opening of business on the day on which such
change in the Base Rate or the LIBOR Reserve Requirement becomes effective.
Each determination of an interest rate by the Bank pursuant to any provision
of this Agreement shall be conclusive and binding on the Borrower in the
absence of manifest error.
2.5 Fees.
(a) Commitment Fee.
The Borrower agrees to pay to the Bank a commitment fee from the date of
this Agreement, computed at the rate of 0.25% per annum on the average daily
unused portion of the Line of Credit during the period for which payment is
made, payable quarterly in arrears on the first Business Day of each fiscal
quarter and the Termination Date.
(b) Facility Fee.
The Borrower agrees to pay on the Closing Date to the Lender $73,000.00,
which amount represents the unpaid portion of the $123,000.00 facility fee
(which amount is 0.5% of the aggregate amount of the Line of Credit and the
Term Loan as of the Closing Date) of which $50,000 was previously paid by the
Borrower upon the signing of the commitment letter for the facility set forth
in this Agreement.
(c) Letter of Credit Fee.
The Borrower shall pay to the Bank a letter of credit fee with respect
to the Letters of Credit equal to the Applicable LIBOR Line of Credit Margin
then in effect on the average daily maximum amount available to be drawn by
the beneficiary of such Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon Letters
of Credit outstanding for that quarter as calculated by the Bank. Such letter
of credit fees shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
Closing Date, through the Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be
made on the Termination Date (or such later expiration date).
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(d) Fronting Fee, etc.
The Borrower shall pay to the Bank a letter of credit fronting fee for
each Letter of Credit issued by the Bank equal to 0.125% of the face amount
(or increased face amount, as the case may be) of such Letter of Credit. Such
Letter of Credit fronting fee shall be due and payable at the time the Letter
of Credit is issued. The Borrower shall pay to the Bank from time to time on
demand the normal processing fees, and other standard costs and charges, of
the Bank relating to letters of credit as from time to time in effect.
(e) Make Whole Fee.
In the event that the Borrower makes a prepayment against any principal
amounts outstanding prior to the end of the Interest Period elected by the
Borrower for such amounts, whether that payment is made voluntarily or by
reason of an acceleration of the payment date of said amount following the
occurrence of an Event of Default, the Borrower shall pay to the Bank a Make
Whole Fee. A certificate as to the amount of the Make Whole Fee submitted by
the Bank to the Borrower setting forth in reasonable detail the basis of
computation of such amounts shall be conclusive and binding, in the absence
of manifest error, as to the amount due. The "Make Whole Fee" shall mean, for
any prepayment of any principal amounts prior to the end of the Interest
Period elected by the Borrower for such amounts, an amount (not less than
zero) equal to a fraction, the numerator of which is the product of (i) the
amount of such prepayment, multiplied by (ii) the Make Whole Rate, multiplied
by (iii) the Remaining Term, and the denominator of which is 360, the entire
amount of which is discounted to present value using an interest rate set
within the reasonable discretion of the Lender. The "Make Whole Rate" shall
mean for any such prepayment (or portion thereof) the per annum rate of
interest equal to the difference between (i) interest rate which would have
been charged on the amounts prepaid, and (ii) the yield on obligations of the
United States Treasury as determined by the Lender as of the date of the
prepayment for such obligations having a maturity approximately equal to the
Remaining Term. "Remaining Term" shall mean the number of days until the end
of the Interest Period.
2.6 Mandatory Prepayments and Line of Credit Reductions.
The Borrower shall make prepayments under the Term Loan in the amount of
any Required Reduction Amounts, which prepayments are to be applied to any
principal amounts due under the Term Loan in inverse order of maturity. If
there are no amounts due under the Term Loan, or if the Required Reduction
Amount exceeds the amount due under the Term Loan, there shall be a reduction
in the amount outstanding under the Line of Credit and the amount of the Line
of Credit Commitment in the amount of the Required Reduction Amount or any
excess amount, as the case may be. In the event that the Required Reduction
Amount exceeds the Line of Credit Commitment then the Line of Credit shall
terminate. "Required Reduction Amount" shall mean all Net Cash Proceeds from
the sale of assets other than in the ordinary course of business,
Extraordinary Receipts and Securities Issuance Proceeds; provided, however,
in the case of proceeds from the sale of assets and Extraordinary Receipts
which are proceeds from insurance resulting from the loss of or damage to the
assets of the Borrower (i) the Borrower may elect to exempt up to an
aggregate of $100,000 of such amounts from being a Required Reduction Amount
during the term of this Agreement, and (ii) for any such amounts exceeding
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an aggregate of $100,000, the Borrower may elect to defer such amounts
from being a Required Reduction Amount for a period of up to 120 days in the
case of a sale of assets, and up to 180 days in the case of insurance
proceeds, during which period the Borrower may provide proof of the purchase
of new assets functionally replacing and otherwise comparable to the assets
sold, damaged or destroyed or proof of the repair of any assets damaged and
thereby permanently exempt such amounts from treatment as a Required
Reduction Amount.
2.7 Requirements of Law.
In the event that after the date hereof, any change in any law,
regulation or treaty or in the interpretation or application thereof or
compliance by the Bank with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority,
agency or instrumentality: (i) subjects or shall subject the Bank to any tax
of any kind whatsoever with respect to this Agreement, the loans made
hereunder or the issuance or maintenance of the Letters of Credit hereunder,
or changes the basis of taxation of payments to the Bank of principal,
commitment fees, interest or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of the Bank); (ii)
imposes, modifies or holds or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of the Bank, which reserve, special deposit,
compulsory loan or similar requirement is not otherwise included in
determination of the interest rate hereunder; (iii) imposes or shall impose
on the Bank any other condition; and (iv) the result of any of the foregoing
is to, directly or indirectly, increase the cost to the Bank of making,
renewing or maintaining advances or extensions of credit or issuing or
maintaining Letters of Credit or to reduce any amount receivable thereunder
then, in any such case, the Borrower shall promptly pay the Bank, upon its
demand, any additional amounts necessary to compensate the Bank for such
additional cost or reduced amount receivable. If the Bank becomes entitled to
claim any additional amounts pursuant to this subsection, it shall promptly
notify the Borrower of the event by reason of which it has become so
entitled. The good faith determination as to any additional amounts payable
pursuant to the foregoing sentence by the Bank shall be conclusive in the
absence of manifest error.
2.8 Determinations.
In making the determinations contemplated by Section 2.7 hereof the Bank
may make such estimates, assumptions, allocations and the like that it, in
good faith, determines to be appropriate. All such determinations shall be
final, binding and conclusive upon the Borrower, except to the extent of any
manifest error in computation or transmission, however, the Bank will permit
the Borrower to rebut such determinations if it does so in writing, with
appropriate evidence thereof, within ten (10) Business Days from the date of
notification thereof by the Bank. The Bank shall furnish to the Borrower a
certificate outlining in reasonable detail the computation of any amounts
claimed by it under Section 2.7 and the assumptions underlying such
computations, provided that the failure to deliver a certificate shall not
affect the Bank's right to such amounts, but shall extend the time for the
Borrower to respond thereto as required above.
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2.9 Payments and Computations.
All amounts payable by the Borrower to the Bank under this Agreement or
the Notes shall be paid directly to the Bank in immediately available funds
at the address of the Bank set forth in Section 10.2 hereof or at such other
address of which the Bank shall give notice to the Borrower pursuant to
Section 10.2 hereof. The Bank is authorized to charge any account of the
Borrower at the Bank for any payment due by the Borrower under this Agreement
or any of the Notes. All computations of interest hereunder shall be made by
the Bank on the basis of a year of 360 days for the actual number of days
elapsed. All payments under each of the Notes shall be applied first to the
payment of interest due and payable thereunder and then to the reduction of
the outstanding principal balance thereof.
2.10 Prepayment and Repayment.
(a) If prior to the first day of any Interest Period for any Interest
Rate Tranche, the Bank shall have determined (which determination shall be
conclusive and binding upon the Borrower absent manifest error) that, by
reason of circumstances affecting the interbank eurodollar market, adequate
and reasonable means do not exist for ascertaining LIBOR for the Interest
Period the Bank shall give telecopy or telephonic notice thereof to the
Borrower as soon as practicable thereafter. If such notice is given all
amounts due under the Loans shall bear interest at the Base Rate plus the
Applicable Base Rate Line of Credit Margin or the Base Rate plus the
Applicable Base Rate Term Loan Margin, as may be applicable. However, if the
Borrower has hedged the interest rate on the Loans with a Swap Agreement,
then the applicable rate with respect to the portion of the Loans for which
the interest rate has been hedged shall immediately be converted to the
floating rate payable by Bank under Swap Agreement plus the Applicable LIBOR
Line of Credit Margin or the Applicable LIBOR Term Loan Margin as may be
applicable.
(b) Notwithstanding any other provisions herein, if any Requirement of
Law or any change therein or in the interpretation or application thereof
shall make it unlawful for the Bank to make or maintain loans whose interest
rate is determined in relation to LIBOR, all amounts due shall bear interest
at the Bank's floating Base Rate plus the Applicable Base Rate Line of Credit
Margin or the Base Rate plus the Applicable Base Rate Term Loan Margin, as
may be applicable. However, if the Borrower has hedged the interest rate on
Loans with a Swap Agreement, then the applicable rate with respect to the
portion of the Loans for which the interest rate has been hedged shall
immediately be converted to the floating rate payable by Bank under Swap
Agreement plus the Applicable LIBOR Line of Credit Margin or the Applicable
LIBOR Term Loan Margin as may be applicable.
(c) The Borrower agrees to indemnify the Bank and hold the Bank harmless
from any loss or expense which the Bank may sustain or incur as a consequence
of (1) default by the Borrower in payment when due of the principal amount of
or interest on any Loans, (2) default by the Borrower in making any
prepayment after the Borrower has given a notice in accordance with
provisions of this Agreement, (3) the making of a prepayment on a Loan with a
fixed rate before the date such fixed rate is set to expire or the Loan is to
be repaid, (4) the making of a prepayment on a day which is not the last day
of an Interest Period with respect thereto, including, without limitation, in
each case, any such loss or expense arising from the
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reemployment of funds obtained by it to maintain the Loans or from fees
payable to terminate the deposits from which such funds were obtained. This
covenant shall survive termination of this Agreement, payment of the
outstanding Note and all other amounts payable hereunder. Any prepayment will
not affect the Borrower's obligation to continue making payments under any
Swap Agreement, which shall remain in full force and effect notwithstanding
such prepayment.
(d) All payments made by the Borrower under any Loan Document shall be
made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Bank as a result of a present or former
connection between the Bank and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Bank having executed, delivered or performed its obligations or received a
payment under, or enforced, any Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable
to the Bank hereunder or under the Note, the amounts so payable to the Bank
shall be increased to the extent necessary to yield to the Bank (after
payment of all Non Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in any Loan Document.
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Bank a certified copy of
an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Bank the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Bank for any incremental taxes, interest or penalties that may become
payable by the Bank as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Note and all other amounts payable hereunder.
ARTICLE III SECURITY
As security for the prompt payment, performance, satisfaction and
discharge when due of all the Obligations, the Borrower has granted to the
Bank a perfected security interest or mortgage lien on all of its assets.
3.1 Reaffirmation of Second Amended and Restated Security Agreement.
The Borrower hereby reaffirms the grant of the lien and security
interest made by it in the Second Amended and Restated Security Agreement
dated as of February 1, 1999 and confirms that, among other things, all the
obligations of the Borrower to the Bank under this Agreement are secured by
such lien and security interest. The Borrower restates each of the
representations and warranties contained in the Second Amended and Restated
Security Agreement as of the date hereof.
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3.2 Reaffirmation of Amended and Restated Patent Security Agreement.
The Borrower hereby reaffirms the grant of the lien and security
interest made by it in the Amended and Restated Patent Security Agreement
dated as of February 1, 1999 and confirms that, among other things, all the
obligations of the Borrower to the Bank under this Agreement are secured by
such lien and security interest.
3.3 Reaffirmation of Amended and Restated Trademark Collateral Assignment.
The Borrower hereby reaffirms the grant of the lien and security
interest made by it in the Amended and Restated Trademark Collateral
Assignment dated as of February 1, 1999 and confirms that, among other
things, all the obligations of the Borrower to the Bank under this Agreement
are secured by such lien and security interest.
3.4 Reaffirmation of Mortgage.
The Borrower hereby reaffirms the grant of the mortgage lien and
confirms its intention that, among other things, all the obligations of the
Borrower to the Bank under this Agreement are secured by such mortgage lien.
The Borrower restates each of the representations and warranties contained in
the Mortgage as of the date hereof.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the Bank to execute and deliver this Agreement and to
make the Loans available to the Borrower, the Borrower represents and
warrants to the Bank that, as of the date hereof:
4.1 Good Standing of the Borrower; Authorization.
The Borrower is duly incorporated, organized and existing and in good
standing in the State of Delaware and is duly qualified as a foreign
corporation and authorized to do business in all other jurisdictions wherein
the nature of its business or property makes such qualification necessary,
and has the corporate power to own its properties and to carry on its
business as now conducted. As of the date hereof, the Borrower is not doing
business in and owns no property in the State of California. The execution,
delivery and performance of this Agreement, and the Loan Documents have been
duly authorized by all necessary corporate proceedings on the part of the
Borrower.
4.2 Compliance with Laws and Other Agreements.
The Borrower is in compliance with all laws, rules, regulations,
judgments, decrees, orders, agreements and requirements which affect in any
material way the Borrower, its assets or the operation of its business and
has not received, and has no knowledge of, any order or notice of any
governmental investigation or of any violation or claim of violation of any
law, regulation, judgment, decree, order, agreement, or other governmental
requirement.
-19-
4.3 No Conflict; Governmental Approvals.
The execution, delivery, and performance of this Agreement and each of
the Loan Documents will not (i) conflict with, violate, constitute a default
under, or result in a breach of any provision of any applicable law, rule,
regulation, judgment, decree, order, instrument or other agreement, or (ii)
conflict with or result in a breach of any provision of the certificate of
incorporation or by-laws of the Borrower. No authorization, permit, consent
or approval of or other action by, and no filing, registration or declaration
with, any governmental authority or regulatory body is required to be
obtained or made by the Borrower for the due execution, delivery and
performance of this Agreement or any of the Loan Documents, except such as
have been duly obtained or made prior to the date of this Agreement and are
in full force and effect as of the date of this Agreement (copies of which
have been delivered to the Bank).
4.4 Financial and Other Information Regarding Borrower.
(a) The Borrower has delivered to the Bank true, correct and complete
copies of (i) the balance sheet of the Borrower as of December 31, 1998, and
related statements of income for the period then ended, together with notes
thereto and the unqualified opinion thereon, of BDO ▇▇▇▇▇▇▇, LLP, and (ii)
the unaudited balance sheet of the Borrower as of June 30, 1999 and related
statements of income for the two fiscal quarters then ending. Those financial
statements ("Financial Statements") present fairly the financial position of
the Borrower and the results of the operations of the Borrower as of the
dates and for the periods indicated, in conformity with GAAP.
(b) Except as set forth on Schedule 4.4(b) hereto, the Borrower has no
Indebtedness other than as shown in the most recent Financial Statements, and
any subsequent interim financial statements which have been delivered to the
Bank.
(c) Except as set forth on Schedule 4.4(c) hereto, the Borrower has no
"investment" (as such term is defined under GAAP), whether by stock purchase,
capital contribution, loan, advance, purchase of property or otherwise, in
any Person, other than as shown in the most recent Financial Statements, and
any subsequent interim financial statements which have been delivered to the
Bank.
(d) As of September 30, l999 Borrower was in compliance with the
financial covenants set forth on Schedule 6.16 of the Fourth and Restated
Loan Agreement date as of February 1, 1999 between the Borrower and the Bank,
as amended.
4.5 Taxes.
The Borrower is not delinquent in payment of any income, property or
other tax, except for any delinquency in the payment of a tax which is
contested in good faith by the Borrower and for which appropriate reserves
have been established in accordance with GAAP.
4.6 Encumbrances and Guaranties.
(a) All properties and assets of the Borrower are owned by the Borrower
free and clear of all Encumbrances except (i) those for taxes or other
government charges either not yet
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delinquent or the nonpayment of which is permitted by Section 4.5 of
this Agreement; (ii) those arising in connection with Indebtedness that do
not materially impair the use or value of the properties or assets of the
Borrower in the conduct of its businesses; (iii) Encumbrances whose release
and termination is evidenced by the Borrower's delivery to the Bank of
appropriate documents; (iv) Encumbrances otherwise permitted under the Loan
Documents; and (v) Encumbrances disclosed in the most recent Financial
Statements.
(b) The Borrower is not obligated under any Guaranty.
4.7 Material Adverse Changes.
Since June 30, 1999, there has not been any material adverse change in
the business, operations, properties or financial position of the Borrower.
The Borrower does not know of any fact (other than matters of a general
economic or political nature) which materially adversely affects, or, so far
as the Borrower can now reasonably foresee, will materially adversely affect,
the business, operations, properties or financial position of the Borrower or
the performance by the Borrower of its obligations under this Agreement and
the other Loan Documents.
4.8 Margin Securities.
The assets of the Borrower do not include any "margin securities" within
the meaning of Regulations G or U of the Board of Governors of the Federal
Reserve System (12 C.F.R. 207, 221), and the Borrower does not have any
present intention of acquiring any margin security.
4.9 ERISA.
The provisions of each employee benefit plan as defined in Section 3(3)
of ERISA ("Plan") maintained by the Borrower complies with all applicable
requirements of ERISA and of the Code, and with all applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No reportable event, as defined in Section 4043 of ERISA,
has occurred with respect to any Plan; no Plan to which Section 4021 of ERISA
applies has been terminated; no Plan has incurred any liability to PBGC as
provided in Section 4062, 4063 and 4064 of ERISA; no Plan has been involved
in any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code; and there are no unfunded liabilities with respect
to any Plan which are not disclosed in the Financial Statements.
4.10 Pending Litigation.
Except as listed on Schedule 4.10, there are no actions, suits,
proceedings or investigations pending, or, to the knowledge of the Borrower,
threatened against or affecting the Borrower, before any court, arbitrator or
administrative or governmental body which, in the aggregate, might adversely
affect any action taken or to be taken by the Borrower under this Agreement
and the other Loan Documents or which, in the aggregate, might materially
adversely affect the business, operations, properties or financial position
of the Borrower, or the ability of the Borrower to perform its obligations
under this Agreement and the other Loan Documents.
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4.11 Valid, Binding and Enforceable.
This Agreement and the Loan Documents to which the Borrower is a party
have been duly and validly executed and delivered by the Borrower and
constitute the valid and legally binding obligations of such parties
enforceable in accordance with their respective terms, except as enforcement
of this Agreement and the other Loan Documents may be limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors' rights and except as enforcement is subject to
general equitable principles.
4.12 Priority of Security Interests.
The Second Amended and Restated Security Agreement dated as of February
1, 1999, together with the financing statements which have been filed in
connection therewith have created valid first perfected security interests in
the personal property of the Borrower described therein as collateral for all
the Obligations subject to no prior Encumbrances.
4.13 Environmental Matters.
(a) The Borrower has performed all of its obligations under, has
obtained all necessary approvals, permits, authorizations and other consents
required by, and is not in material violation of, any Environmental Laws.
(b) The Borrower has not received any notice, citation, summons,
directive, order or other communication, written or oral, from, and the
Borrower has no knowledge of the filing or giving of any such notice,
citation, summons, directive, order or other communication by, any
governmental or quasi-governmental authority or agency or any other Person
concerning the otherwise handle any Hazardous Material in violation of any
applicable Environmental Laws.
(c) To the best of the Borrower's knowledge, after due inspection, there
are no Hazardous Materials within, on or under any real property owned or
occupied by the Borrower in violation of any applicable Environmental Laws.
4.14 Year 2000.
On the basis of a review and assessment of the Borrower's systems and
equipment and inquiry made of its material suppliers, vendors and customers,
the Borrower reasonably believes that the "Year 2000 problem" (that is, the
inability of computers, as well as embedded microchips in non-computing
devices, to perform properly date-sensitive functions with respect to certain
dates prior to and after December 31, 1999), including costs of remediation,
will not result in a material adverse effect on the Borrower. The Borrower
has developed feasible contingency plans which will adequately ensure
uninterrupted and unimpaired business operation in the event of failure of
its own or a third party's systems or equipment due to the Year 2000 problem,
including those of vendors, customers, and suppliers, as well as a general
failure of or interruption in its communications and delivery infrastructure.
-22-
4.15 No Untrue Statements.
Neither this Agreement, the Loan Documents nor any other document,
certificate or statement furnished or to be furnished by the Borrower or by
any other party to the Bank in connection herewith contains, or at the time
of delivery will contain, any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading.
ARTICLE V CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS
The Bank's obligations hereunder are conditioned upon the satisfaction
by the Borrower of the following conditions precedent:
5.1 Documents to be Delivered by the Borrower at Closing.
The Borrower shall deliver or cause to be delivered to the Bank at the
Closing the following:
(a) This Agreement duly executed by the Borrower;
(b) The Fifth Amended and Restated Line of Credit Note duly executed by
the Borrower;
(c) The Term Loan Note duly executed by the Borrower;
(d) Evidence of the Borrower's having complied with those covenants
regarding insurance as are contained in this Agreement and the other Loan
Documents;
(e) A certificate of the Secretary or an Assistant Secretary of the
Borrower appropriately dated including (i) resolutions duly adopted by the
Borrower authorizing the transactions under the Loan Documents; (ii) evidence
of the incumbency and signature of the officers executing on the Borrower's
behalf any of the Loan Documents and any other document to be delivered
pursuant to any such documents, together with evidence of the incumbency of
such officers; (iii) a certification that the by-laws and the articles of
incorporation of the Borrower have not been amended since December 11, 1995;
and (iv) certificates of authority or good standing for the Borrower from its
jurisdiction of incorporation and any other jurisdiction where the Borrower
is qualified to do business;
(f) a one year budget for capital expenditures of the Borrower;
(g) a listing of all of the Borrower's intangible assets;
(h) a copy of each and every authorization, pen-nit, consent, and
approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body which is required to be obtained
or made by the Borrower for the due execution, delivery and performance of
this Agreement and the other Loan Documents; and
-23-
(i) The opinion of Stradley, Ronon, ▇▇▇▇▇▇▇ & Young, LLP in form and
substance reasonably satisfactory to the Bank and its counsel.
5.2 Conditions Precedent to Making Line of Credit Loans.
The Bank shall not be obligated to make any Line of Credit Loans
hereunder unless:
(a) As of the date of the proposed advance, no Event of Default has
occurred and is continuing and no event has occurred and is continuing which,
with the giving of notice or lapse of time, or both, would constitute an
Event of Default;
(b) The representations and warranties contained in ARTICLE IV are true
and correct on the date of the proposed advance, except that the
representations and warranties in Section 4.4 shall refer to the financial
statements most recently supplied to the Bank pursuant to Section 6.2 of this
Agreement;
(c) No material adverse change has occurred in the business, property,
operations or condition (financial or otherwise) of the Borrower since the
date hereof; and
(d) The Borrower has delivered to the Bank, upon the Bank's request, a
certificate executed by the chief executive officer of the Borrower
confirming the statements made in paragraphs (a), (b), and (c) above. Whether
or not such a certificate has been requested, by requesting a Line of Credit
Loan Borrower will be deemed to have represented to the Bank that the
statements made in paragraphs (a), (b) and (c) above are true.
ARTICLE VI AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower hereby covenants and agrees that from the date hereof and
until satisfaction in full of the Obligations, unless the Bank shall
otherwise consent in writing, the Borrower shall do the following:
6.1 Use of Proceeds.
Use the proceeds of the borrowings hereunder only for the purposes
specified in Sections 2.1 and 2.3 of this Agreement.
6.2 Financial Statements.
Furnish to the Bank the following financial statements which shall be
prepared in accordance with GAAP and signed by the chief financial officer of
the Borrower:
(a) within ninety (90) days after the end of each fiscal year, the
consolidated and consolidating financial statements of the Borrower,
including a balance sheet, statement of income and statement of cash flows.
Such financial statements shall present fairly the financial condition of the
Borrower as of the close of such year and the results of its operations and
its cash flows during such year, in accordance with GAAP, and shall be
audited and accompanied by the opinion, satisfactory in form and substance to
the Bank, of BDO ▇▇▇▇▇▇▇, LLP or another independent public accountant
acceptable to the Bank;
-24-
(b) within forty five (45) days after the end of each fiscal quarter,
the financial statements of the Borrower, including a balance sheet,
statement of income and statement of cash flows, names, addresses and other
requested information for the ten Account Debtors which owe the most money to
the Borrower as of the end of such fiscal quarter, and such other financial
statements of the Borrower in such detail as the Bank may reasonably request
(such financial statements shall present fairly the financial condition of
the Borrower as of the close of such quarter and the results of its
operations and its cash flows during such quarter, in accordance with GAAP,
certified by the chief financial officer of the Borrower);
(c) within fifteen (15) days of the end of each month (or more
frequently if required by Bank), a completed Borrowing Base and Loan Report
in the form attached as Exhibit 6.2(c) (a "Borrowing Base and Loan Report").
Borrower shall attach the following to the Borrowing Base and Loan Report,
which shall be certified by the chief financial officer or president of
Borrower to be accurate and complete and in compliance with the terms of the
Loan Documents: (i) a report listing all Accounts and all Eligible Accounts
of Borrower as of the last Business Day of such month (an "Accounts
Receivable Report") which shall include the amount and age of each Account, a
detailing of all credits due such Account Debtor by Borrower stated in the
number of days since the original invoice date, and such other information as
Bank may require in order to verify the Eligible Accounts, all in reasonable
detail and in form acceptable to Bank, (ii) a report listing all Inventory
and all Eligible Inventory of Borrower as of the last Business Day of such
month, the cost thereof, specifying raw materials, work-in-process, finished
goods and all Inventory which has not been timely sold by Borrower in the
ordinary course of business, and such other information as Bank may require
relating thereto, all in form acceptable to Bank (an "Inventory Report"), and
(iii) a schedule of all accounts payable of Borrower setting forth for each
such account the number of days which have elapsed since the original date of
invoice and containing the name and address of each vendor and such other
detail requested by Bank (an "Accounts Payable Report");
(d) within ten (10) days after receipt, a copy of any management letter
issued to the Borrower by BDO ▇▇▇▇▇▇▇, LLP or another independent public
accountant acceptable to the Bank;
(e) by each April 1, a budget (including amounts for capital
expenditures) for the current fiscal year and Projections for the following
three fiscal years;
(f) within a reasonable period of time, such other financial statements
of the Borrower, in such detail as the Bank may reasonably request, and such
other information in the Borrower's possession as the Bank may reasonably
request; and
(g) at the time the statements required in Sections 6.2(a) and 6.2(b)
are provided to the Bank the Borrower shall also furnish a certificate of the
chief financial officer of the Borrower, (i) certifying that no Default or
Event of Default has occurred and is continuing hereunder (including but not
limited to no default under any financial covenant or covenants contained
herein) or under any other instrument or agreement between the Borrower and
the Bank or, if such Default or Event of Default has occurred and in
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, (ii) containing computations
demonstrating compliance with any financial covenant or covenants contained in
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this Agreement; (iii) and otherwise substantially in the form of, and covering
the matters set forth in, Exhibit 6.2(g) (a "Compliance Certificate").
6.3 Ordinary Course of Business; Records.
Conduct its business only in the ordinary course and keep accurate and
complete books and records of its assets, liabilities and operations
consistent with sound business practices and in accordance with GAAP.
6.4 Information for the Bank.
Make available during normal business hours for inspection by the Bank
or its designated representatives any of its books and records when
reasonably requested by the Bank to do so, and furnish the Bank any
information reasonably requested regarding its operations, business affairs
and financial condition within a reasonable time after the Bank gives notice
of its request therefor. In particular, and without limiting the foregoing,
the Borrower shall permit, during normal business hours, representatives of
the Bank's audit department to make a field inspection of the Borrower's
books, records and assets as such representatives deem necessary and proper.
The Borrower shall pay for the cost of any such inspections; provided,
however, that so long as no Event of Default shall have occurred, then
Borrower shall be required to pay for only one such field inspection during
any one fiscal year.
6.5 Insurance.
Carry at all times in financially sound and reputable insurers: (a) all
workers' compensation or similar insurance as may be required under the laws
of any jurisdiction; (b) public liability insurance against claims for
personal injury, death or property damage suffered upon, in or about any
premises occupied by it or occurring as a result of the ownership,
maintenance or operation by it of any automobile, truck or other vehicle or
as a result of the use of products manufactured, constructed or sold by it,
or services rendered by it; (c) business interruption insurance covering risk
of loss as a result of the cessation for all or any part of one year of any
substantial part of the business conducted by it; (d) hazard insurance
against such other hazards as are usually insured against by business
entities of established reputation engaged in like businesses and similarly
situated, including, without limitation, fire (flood, if applicable) and
extended coverage; and (e) such other insurance as the Bank may from time to
time reasonably require, and pay all premiums on the policies for all such
insurance when and as they become due and take all other actions necessary to
maintain such policies in full force and effect at all times. The insurance
specified in Subsections (b), (c) and (d) shall be maintained in such amounts
(and with co-insurance and deductibles) as such insurance is usually carried
by business entities of established reputation engaged in the same or similar
business and similarly situated, provided that the amount of such coverage
shall not be in an amount less than 80% of the insurable value of the
Borrower's assets or 100% of the amount of the Loans. The Borrower shall from
time to time, upon request by the Bank, promptly furnish or cause to be
furnished to the Bank evidence, in form and substance satisfactory to the
Bank, of the maintenance of all insurance required to be maintained hereby,
including, without limitation, such originals or copies as the Bank may
request of policies, certificates of insurance, riders and endorsements
relating to such insurance and proof of premium payments. The Borrower shall
cause each
-26-
hazard insurance policy to provide, and the insurer issuing each such
policy to certify to the Bank, that (a) if such insurance be proposed to be
cancelled or materially changed for any reason whatsoever, such insurer will
promptly notify the Bank and such cancellation or change shall not be
effective for 30 days after receipt by the Bank of such notice, unless the
effect of such change is to extend or increase coverage under the policy; (b)
the Bank shall be named as lender loss payee with respect to personal
property and mortgagee with respect to real property; and (c) the Bank will
have the right, at its election, to remedy any default in the payment of
premiums within 30 days of notice from the insurer of such default. The
foregoing covenants regarding insurance are in addition to, and not intended
to supersede, those covenants regarding insurance set forth in the Loan
Documents. In the event and to the extent of any conflict between the
provisions of this Agreement and the provisions of the Loan Documents
regarding the insuring of Collateral, the provisions of the Loan Documents
with respect thereto shall govern.
6.6 Maintenance.
Maintain its equipment, real property and other properties in good
condition and repair (normal wear and tear excepted) and pay and discharge
the cost of repairs thereto or maintenance thereof.
6.7 Taxes.
Pay all taxes, assessments, charges and levies imposed upon it or on any
of its property, or which it is required to withhold and pay over, and
provide evidence of payment thereto to the Bank if the Bank so requests,
except where contested in good faith by lawful and appropriate proceedings
and where adequate reserves therefor have been set aside on its books;
provided, however, that the Borrower shall pay all such taxes, assessments,
charges and levies forthwith whenever foreclosure on any lien which attaches
or security therefor appears imminent.
6.8 Leases.
Pay all rent or other sums required by every lease to which the Borrower
is a party as the same becomes due and payable, perform all its obligations
as tenant or lessee thereunder except where contested in good faith by lawful
and appropriate proceedings and where adequate reserves therefor have been
set aside; and keep all such leases at all times in full force and effect
during the terms thereof.
6.9 Corporate Existence; Certain Rights; Laws.
Do all things necessary to preserve and keep in full force and effect in
each jurisdiction in which it conducts business the business existence,
licenses, permits, rights, patents, trademarks, trade names and franchises of
the Borrower and comply with all present and future laws, ordinances, rules,
regulations judgments, orders and decrees which affect in any material way
the Borrower, its assets or the operation of its business.
6.10 Notice of Litigation or Other Proceedings.
Give immediate notice to the Bank of (i) the existence of any dispute,
(ii) the institution of any litigation, administrative proceeding or
governmental investigation involving the
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Borrower or (iii) the entry of any judgment, decree or order against or
involving the Borrower, any of which would reasonably be expected to
materially and adversely affect the operation, financial condition, property
or business of the Borrower or affect the enforceability of this Agreement or
any of the other Loan Documents.
6.11 Indebtedness.
Pay or cause to be paid when due (or within applicable grace periods)
all Indebtedness of the Borrower.
6.12 Notice of Events of Default.
Give immediate notice to the Bank if the Borrower becomes aware of the
occurrence of any Event of Default, or of any fact, condition or event which
with the giving of notice or lapse of time, or both, would be an Event of
Default, or of the failure of the Borrower to observe or perform any of the
conditions or covenants to be observed or performed by it under this
Agreement or any of the other Loan Documents.
6.13 ERISA.
Maintain each Plan in compliance with all applicable requirements of
ERISA and of the Code and with all applicable rulings and regulations issued
under the provisions of ERISA and of the Code. As promptly as practicable
(but in any event not later than ten (10) days) after the Borrower receives
from the PBGC a notice of intent to terminate any Plan or to appoint a
trustee to administer any Plan, after the Borrower has notified the PBGC that
any reportable event, as defined in Section 4043 of ERISA, with respect to
any Plan has occurred, or after the Borrower has provided a notice of intent
to terminate to each affected party, as defined for purposes of Section
4041(a)(2) of ERISA, with respect to any Plan, a certificate of the chief
executive officer of the Borrower shall be furnished to the Bank setting
forth the details with respect to the events resulting in such reportable
event, as the case may be, and the action which the Borrower proposes to take
with respect thereto, together with a copy of the notice of intent to
terminate or to appoint a trustee from the PBGC, of the notice of such
reportable event or of the Borrower's notice of intent to terminate, as the
case may be.
6.14 Deposit Accounts.
Use the Bank as its primary depository institution, unless otherwise
agreed in writing by the Bank in writing.
6.15 Management.
Furnish to Bank within five (5) days of any election or appointment of
officers or directors, written notice of any change in the persons who from
time to time become officers and directors of Borrower and retain executive
management personnel at all times satisfactory to the Bank, it being
understood that management, which consists of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President
and CEO, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Executive Vice President, of the Borrower as
of the date hereof, is satisfactory.
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6.16 Compliance with Environmental Laws.
Comply fully with all Environmental Laws and not use any property which
it owns or occupies to generate, treat, store, transport, transfer, dispose
of, release or otherwise handle any Hazardous Material, except for ordinary
and customary amounts of such materials used during the ordinary course of
Borrower's business.
6.17 Interest Rate Protection.
The Borrower shall maintain in full force and effect one or more Swap
Agreements hedging the interest rate risks related to the obligations of the
Borrower under the Term Loan, in an aggregate notional amount of at least 50%
of the principal balance due under the Term Loan on terms and conditions
reasonably acceptable to the Bank.
6.18 Further Actions.
Cooperate and join with the Bank, at its own expense, in taking all such
further actions as the Bank, in its sole judgment, shall deem necessary to
effectuate the provisions of the Loan Documents and to perfect or continue
the perfected status of all Encumbrances granted to the Bank pursuant to the
Loan Documents, including, without limitation, the execution, delivery and
filing of financing statements, amendments thereto and continuation
statements, the delivery of chattel paper, documents or instruments to the
Bank, and the notation of Encumbrances in favor of the Bank on certificates
of title.
6.19 Material Adverse Change.
Notify the Bank in writing upon any material adverse change in the
business, operations, properties or condition (financial or otherwise) of the
Borrower.
6.20 Meeting Regarding Projections.
On or prior to June 1 of each fiscal year the Borrower shall participate
in a meeting with the Bank at which time the Borrower shall discuss with the
Bank the Borrower's financial statement projections for the then current
fiscal year, including without limitation, the Borrower's projected balance
sheet, statement of income and statement of cash flows for such fiscal year.
ARTICLE VII NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that until satisfaction in full
of the Obligations, it will not do any one or more of the following without
first obtaining the written consent of the Bank:
7.1 Financial Covenants.
(a) Have a Leverage Ratio of more than (i) 3.25 to 1 at ▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇) 3.0 to 1 for March 31, 2000 and June 30, 2000, and (iii) 2.5 to 1
for September 30, 2000 and thereafter. "Leverage Ratio" of the Borrower as of
the last day of any fiscal quarter shall mean the ratio of
-29-
(x) Senior Debt of the Borrower as of that date, to (y) EBITDA of the
Borrower for the four fiscal quarter period ending on that date. "Senior
Debt" of the Borrower as of any date means Indebtedness as of that date.
"EBITDA" of the Borrower for any period shall mean the Borrower's earnings
for such period before interest expense, income tax expense, depreciation and
amortization.
(b) Have a Fixed Charge Ratio of less than (i) 1.0 to 1 for December
3l,1999, (ii) 1.1 to 1 for ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) 1.2 to 1 for June 30, 2000,
(iv) 1.3 to 1 for September 30, 2000 and December 31, 2000, and (v) 1.5 to 1
for March 31, 2001 and thereafter. "Fixed Charge Ratio" of the Borrower as of
the last day of any fiscal quarter shall mean the ratio of (x) EBITDA of the
Borrower for the four fiscal quarter period ending on that date, to (y) the
sum of (A) interest expense and income tax expense for the four fiscal
quarter period ending on that date, and (B) current maturities of long term
Indebtedness and obligations under capital and operating leases for the four
fiscal quarters following such date.
(c) Have a Tangible Net Worth of less than (i) $19,000,000 at December
31, 1999, and (ii) as of the end of each fiscal quarter thereafter, the sum
of (A) the Tangible Net Worth of the Borrower as of the end of the prior
fiscal quarter, plus (B) the income after taxes (as determined in accordance
with GAAP) of the Borrower during the fiscal quarter then ending (if such
amount is positive, otherwise zero). "Tangible Net Worth" shall mean, at any
time, the aggregate Stockholders' Equity, less all intangible assets of the
Borrower, including, without limitation, organization costs, securities
issuance costs, unamortized debt discount and expense, goodwill, excess of
purchase costs over net assets acquired, patents, trademarks, trade names,
copyrights, trade secrets, know how, licenses, franchises, capitalized
research and development expenses, amounts owing from officers and/or
Affiliates and any amount reflected as treasury stock.
7.2 Fundamental Corporate Changes.
(a) Change its name, enter into or effect any merger (except any merger
where the Borrower is the surviving corporation), consolidation, share
exchange involving in excess of 25% of the Borrower's capital stock, or
dissolve.
(b) Sell, transfer, lease or otherwise dispose of all or (except in the
ordinary course of business) any material part of its assets or any
significant product line or process;
(c) Have any Subsidiaries, except Blonder International, Vu-Tech
Communications, Inc., and a new subsidiary ("Newco") to be formed for the
purpose of holding certain intangible assets of Borrower, provided that prior
to the capitalization of Newco, the Bank shall have a first priority
perfected security interest in all of the assets of Newco, and Newco shall
have executed an unlimited guaranty of the Obligations in favor of the Bank.
7.3 Indebtedness.
Incur, create, assume or have any Indebtedness except:
(a) The Loans and any Swap Agreement; and
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(b) Indebtedness constituting either Capital Lease Obligations or
Indebtedness under agreements for the installment purchase of equipment,
provided that (i) such Indebtedness does not exceed 100% of the installment
purchase price of such equipment, and (ii) with respect to such Indebtedness
which, in the aggregate exceeds $500,000 from the date of this Agreement (as
determined on a capitalized basis), the Borrower has submitted at least three
Business Days prior to incurring such excess Indebtedness, a pro forma
Compliance Certificate demonstrating compliance with Section 7.1.
7.4 Encumbrances.
Create or allow any Encumbrances to be on or otherwise affect any of its
property or assets except:
(a) Encumbrances in favor of the Bank;
(b) Encumbrances for taxes, assessments and other governmental charges
incurred in the ordinary course of business which are not yet due and payable
or which are being properly contested in good faith by lawful and appropriate
proceedings;
(c) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation or to participate in any fund in
connection with workmen's compensation, unemployment insurance or other
social security obligations;
(d) Good faith pledges or deposits made in the ordinary course of
business to secure performance of tenders, contracts (other than for the
repayment of Indebtedness) or leases or to secure statutory obligations or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(e) Liens of mechanics, materialmen, warehousemen, carriers or other
similar liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable or are being contested in good
faith by appropriate and lawful proceedings;
(f) Encumbrances securing Indebtedness permitted under Section 7.3(b),
provided that (i)no other covenants of this Agreement are thereby violated
and (ii) no equipment other than the equipment so acquired secures such
Indebtedness;
(g) Encumbrances, if any, otherwise expressly permitted by the Loan
Documents; and
(h) Encumbrances disclosed in the Financial Statements or as set forth
on Schedule 7.4 attached hereto.
7.5 Guaranties.
Directly or indirectly make any Guaranty, other than for the benefit of
Blonder International.
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7.6 Sales and Lease-Backs.
Sell, transfer or otherwise dispose of any property, real or personal,
now owned or hereafter acquired, with the intention of directly or indirectly
taking back a lease on such property.
7.7 Loans, Investments.
Except as set forth on Schedule 4.4(c), purchase, invest in, or make any
loan in the nature of an investment in the stocks, bonds, notes or other
securities or evidence of Indebtedness of any person, or make any loan or
advance to or for the benefit of any Person except for (i) short-term
obligations of the Treasury of the United States of America; (ii)
certificates of deposit issued by banks with shareholders' equity of at least
$100,000,000; (iii) repurchase agreements not exceeding 29 days in duration
issued by banks with shareholders' equity of at least $100,000,000; and (iv)
notes and other instruments generally known as "commercial paper" which arise
out of current transactions, which have maturities at the time of issuance
thereof not exceeding nine months and which have, at the time of such
purchase, investment or other acquisition, the highest credit rating of
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.
7.8 Change in Business.
Discontinue any substantial part, or change the nature of, the business
of the Borrower, or enter into any new business unrelated to the present
business conducted by the Borrower.
7.9 Sale or Discount of Receivables.
Sell any notes receivable or accounts receivable, with or without
recourse.
7.10 Prepayment of Indebtedness.
Make any voluntary prepayments of Indebtedness other than the Loans.
7.11 Limitation on Dividends; Stock Repurchases.
Declare or pay any dividend (other than dividends payable solely in
common stock of the Borrower) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of capital stock of the Borrower whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Borrower.
7.12 ERISA.
(a) Terminate any Plan maintained by the Borrower to which Section 4021
of ERISA applies;
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(b) Allow the value of the benefits guaranteed under Title IV of ERISA
to exceed the value of assets allocable to such benefits;
(c) Incur a withdrawal liability within the meaning of Section 4201 of
ERISA.
7.13 Compliance with Federal Reserve Board Regulations.
(i) Use any of the proceeds of the Loans, directly or indirectly, for
the purposes of purchasing or carrying any "margin security" within the
meaning of Regulations G or U of the Board of Governors of the Federal
Reserve System (12 ▇.▇.▇. ▇▇▇, ▇▇▇), (▇▇) use any of the proceeds of the
Loans, directly or indirectly, for the purpose of purchasing, carrying or
trading in any securities under such circumstances as to involve the Borrower
in a violation of Regulation X of such Board (12 C.F.R. 224), or (iii) take
or permit to be taken any other action which would result in the Loans or the
consummation of any of the other transactions contemplated hereby being
violative of such regulations or any other regulation of such Board.
7.14 Blonder International and Vu-Tech Communications, Inc.
Until satisfaction in full of all Obligations of the Borrower to the
Bank, unless the Bank shall otherwise consent in writing, the Borrower shall
not transfer assets having a value in excess of $200,000 in the aggregate to
Blonder International and Vu-Tech Communications, Inc., and shall not permit
Blonder International and Vu-Tech Communications, Inc. to have assets having
an aggregate book value in excess of $200,000.
ARTICLE VIII EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement shall be
deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
8.1 Borrower's Failure to Pay.
The Borrower fails to pay any amount of principal, interest, fees or
other sums as and when due under this Agreement, any other Loan Documents,
any other Obligation or any Swap Agreement, whether upon stated maturity,
acceleration, or otherwise.
8.2 Breach of Covenants or Conditions.
(a) The Borrower fails to perform or observe any covenant contained in
ARTICLE VII of this Agreement.
(b) The Borrower or any of the Other Loan Parties fails to perform or
observe any term, covenant, agreement or condition in this Agreement (other
than obligations, the breach of which are the basis of an Event of Default
under Sections 8.1 and Section 8.2(a)) any other Loan Documents or any Swap
Agreement or is in violation of non-compliance with any provision of this
Agreement, any other Loan Document or any Swap Agreement, and has not
remedied and fully cured such nonperformance, non-observance, violation of or
non-compliance within thirty (30) days thereafter; provided, however, that
during such thirty (30) day period the Bank's obligations to make further
Loans to the Borrower shall be suspended.
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8.3 Defaults in Other Agreements.
The Borrower or any of the Other Loan Parties fails to perform or
observe any term, covenant, agreement or condition contained in, or there
shall occur any default under or as defined in, any other agreement
applicable to the Borrower or any of the Other Loan Parties or by which any
of them is bound involving a material liability of the Borrower or any of the
Other Loan Parties which shall not be remedied within the period of time (if
any) within which such other agreement permits such default to be remedied,
unless such default is waived by the other party thereto or excused as a
matter of law.
8.4 Agreements Invalid.
The validity, binding nature of, or enforceability of any material term
or provision of any of the Loan Documents is disputed by, on behalf of, or in
the right or name of the Borrower or any of the Other Loan Parties or any
material term or provision of any such Loan Document is found or declared to
be invalid, avoidable, or non-enforceable by any court of competent
jurisdiction.
8.5 False Warranties; Breach of Representations.
Any warranty or representation made by the Borrower or any of the Other
Loan Parties in this Agreement or any other Loan Document or in any
certificate or other writing delivered under or pursuant to this Agreement or
any other Loan Document, or in connection with any provision of this
Agreement or related to the transactions contemplated hereby shall prove to
have been false or incorrect or breached in any material respect on the date
as of which made.
8.6 Judgments.
A final judgment or judgments is entered, or an order or orders of any
judicial authority or governmental entity is issued against the Borrower or
any of the Other Loan Parties (such judgments) and order(s) hereinafter
collectively referred to as "Judgment") (i) for payment of money, which
Judgment, in the aggregate, exceeds Two Hundred Thousand Dollars
($250,000.00) outstanding at any one time which is not covered by insurance;
or (ii) for injunctive or declaratory relief which would have a material
adverse effect on the ability of the Borrower or any of the Other Loan
Parties to conduct its business, and such Judgment is not discharged or
execution thereon or enforcement thereof stayed pending appeal, within thirty
days after entry or issuance thereof, or, in the event of such a stay, such
Judgment is not discharged within thirty days after such stay expires.
8.7 Bankruptcy or Insolvency of the Borrower or Other Loan Parties.
(a) The Borrower or any of the Other Loan Parties becomes insolvent, or
generally fails to pay, or is generally unable to pay, or admits in writing
its inability to pay, its debts as they become due or applies for, consents
to, or acquiesces in, the appointment of a trustee, receiver or other
custodian for the Borrower or any of the Other Loan Parties, as the case may
be, or a substantial part of its property, or makes a general assignment for
the benefit of creditors.
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(b) The Borrower or any of the Other Loan Parties commences any
bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any state or federal bankruptcy or insolvency law, or any dissolution
or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any state or federal bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of the Borrower or any of the Other Loan Parties, or an order for
relief is entered in any such proceeding which is not terminated upon the
earlier of (i) the entry of an order to relief in any such proceeding or (ii)
within ninety (90) days after such case or proceeding is involuntarily
commenced.
(d) A trustee, receiver, or other custodian is appointed for the
Borrower or any of the Other Loan Parties or a substantial part of such
Person's property and such appointment is not terminated within ninety (90)
days thereafter.
ARTICLE IX REMEDIES
9.1 Further Advances; Acceleration; Setoff.
(a) Upon the occurrence of any one or more Events of Default, the Bank
may, in its sole discretion, refuse to make any further advances or Loans to
the Borrower;
(b) Automatically upon the occurrence of any Event of Default described
in Section 8.7 of this Agreement, and in the sole discretion of the Bank upon
the occurrence of any other Event of Default, the unpaid principal balance of
all Loans, all interest and fees accrued and unpaid thereon, and all other
amounts and Obligations payable by the Borrower under this Agreement and the
other Loan Documents shall immediately become due and payable in full, all
without protest, presentment, demand, or further notice of any kind to the
Borrower, all of which are expressly waived by the Borrower;
(c) If any of the Obligations shall be due and payable or any one or
more Events of Default shall have occurred, the Bank shall have the right, in
addition to all other rights and remedies available to it, without notice to
the Borrower, to apply toward and set-off against and apply to the then
unpaid balance of the Notes and the other Obligations any items or funds held
by the Bank, any and all deposits (whether general or special, time or
demand, matured or unmatured, fixed or contingent, liquidated or
unliquidated) now or hereafter maintained by the Borrower for its own account
with the Bank, and any other indebtedness at any time held or owing by the
Bank to or for the credit or the account of the Borrower. For such purpose
the Bank shall have, and the Borrower hereby grants to the Bank, a first lien
on all such deposits. The Bank is hereby authorized to charge any such
account or indebtedness for any amounts due to the Bank. Such right of
set-off shall exist whether or not the Bank shall have made any demand under
this Agreement, the Notes or any other Loan Document and whether or not the
Notes and the other Obligations are matured or unmatured. The Borrower hereby
confirms the Bank's lien on such accounts and right of set-off, and nothing
in this Agreement shall be deemed any waiver or prohibition of such lien and
right of set-off.
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9.2 Further Remedies.
Upon the occurrence of any one or more Events of Default, the Bank may
proceed to protect and enforce its rights under this Agreement and the other
Loan Documents by exercising such remedies as are available to the Bank in
respect thereof under applicable law, either by suit in equity or by action
at law, or both, whether for specific performance of any provision contained
in this Agreement or any of the other Loan Documents or in aid of the
exercise of any power granted in this Agreement or any of the other Loan
Documents.
ARTICLE X MISCELLANEOUS
10.1 Remedies Cumulative; No Waiver.
The rights, powers and remedies of the Bank provided in this Agreement
and the other Loan Documents are cumulative and not exclusive of any right,
power or remedy provided by law or equity, and no failure or delay on the
part of the Bank in the exercise of any right, power, or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power, or remedy preclude other or further exercise thereof, or the exercise
of any other right, power or remedy.
10.2 Notices.
Every notice and communication under this Agreement or any of the other
Loan Documents shall be in writing and shall be given by either (i)
hand-delivery, (ii) first class mail (postage prepaid), (iii) reliable
overnight commercial courier (charges prepaid), or (iv) telecopy or other
means of electronic transmission, if confirmed promptly by any of the methods
specified in clauses (i), (ii) and (iii) of this sentence, to the following
addresses:
If to the Borrower:
Blonder Tongue Laboratories, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Stradley, Ronon, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank:
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇ National
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Senior Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & English, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice given by telecopy or other means of electronic transmission shall
be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery. A party may change its address by giving written notice to the
other party as specified herein.
10.3 Costs, Expenses and Attorneys' Fees.
Whether or not the transactions contemplated by this Agreement and the
other Loan Documents are fully consummated, the Borrower shall promptly pay
(or reimburse, as the Bank may elect) all costs and expenses which the Bank
has incurred or may hereafter incur in connection with the negotiation,
preparation, reproduction, interpretation and enforcement of this Agreement
and the other Loan Documents, the collection of all amounts due hereunder and
thereunder, and any amendment, modification, consent or waiver which may be
hereafter requested by the Borrower or otherwise required. Such costs and
expenses shall include, without limitation, the fees and disbursements of
counsel to the Bank, the costs of appraisal fees, searches of public records,
costs of filing and recording documents with public offices, and similar
costs and expenses incurred by the Bank. Upon the occurrence of an Event of
Default, such costs shall also include the fees of any accountants,
consultants or other professionals retained by the Bank. The Borrower's
reimbursement obligations under this Section shall survive any termination of
this Agreement.
10.4 Survival of Covenants.
This Agreement and all covenants, agreements, representations and
warranties made herein and in any certificates delivered pursuant hereto
shall survive the making of the Loans and the execution and delivery of the
Notes and, subject to the provisions of Section 10.15 hereof, shall continue
in full force and effect until all of the Obligations have been fully paid,
performed, satisfied and discharged.
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10.5 Counterparts; Effectiveness.
This Agreement may be executed in any number of counterparts and by the
different parties on separate counterparts. Each such counterpart shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement. This Agreement shall be deemed to have been
executed and delivered when the Bank has received counterparts hereof
executed by all parties listed on the signature page(s) hereto.
10.6 Headings.
The headings of sections have been included herein for convenience only
and shall not be considered in interpreting this Agreement.
10.7 Payment Due On A Day Other Than A Business Day.
If any payment due or action to be taken under this Agreement or any
Loan Document falls due or is required to be taken on a day which is not a
Business Day, such payment or action shall be made or taken on the next
succeeding Business Day and such extended time shall be included in the
computation of interest.
10.8 Judicial Proceedings.
Each party to this Agreement agrees that any suit, action or proceeding,
whether claim or counterclaim, brought or instituted by any party hereto or
any successor or assign of any party, on or with respect to this Agreement or
any of the other Loan Documents or the dealings of the parties with respect
hereto, or thereto, shall be tried only by a court and not by a jury. EACH
PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each party
waives any right it may have to claim or recover, in any such suit, action or
proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. THE BORROWER
ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT
OF THIS AGREEMENT AND THAT THE BANK WOULD NOT EXTEND CREDIT TO THE BORROWER
IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
10.9 Governing Law.
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of New Jersey.
10.10 Integration.
This Agreement and the other Loan Documents constitute the sole
agreement of the parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior writings with respect
to the subject matter hereof and thereof.
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10.11 Amendment and Waiver.
No amendment of this Agreement, and no waiver of any one or more of the
provisions hereof shall be effective unless set forth in writing and signed
by the parties hereto.
10.12 Successors and Assigns.
(a) Generally. This Agreement (i) shall be binding upon the Borrower and
the Bank and their respective successors and assigns, and (ii) shall inure to
the benefit of the Borrower and the Bank and its respective successors and
assigns, provided, however, that the Borrower may not assign its rights
hereunder or any interest herein without the prior written consent of the
Bank, and any such assignment or attempted assignment by the Borrower shall
be void and of no effect with respect to the Bank.
(b) Participations. The Bank may from time to time sell or otherwise
grant participations in the Loans and the Notes in minimum amounts of
$5,000,000 per participation, and the holder of any such participation, if
the participation agreement so provides, (i) shall, with respect to its
participation, be entitled to all of the rights of the Bank and (ii) may
exercise any and all rights of setoff or banker's lien with respect thereto,
in each case as fully as though the Borrower were directly indebted to the
holder of such participation in the amount of such participation. The Bank
may disclose to prospective participants such information regarding the
Borrower's affairs as the Bank possesses. The Bank shall give notice to the
Borrower of the grant of such participations; however, the failure to give
such notice shall not affect any of the Bank's rights hereunder.
10.13 Severability of Provisions.
Any provision in this Agreement that is held to be inoperative,
unenforceable, voidable, or invalid in any jurisdiction shall, as to that
jurisdiction, be ineffective, unenforceable, void or invalid without
affecting the remaining provisions, and to this end the provisions of this
Agreement are declared to be severable.
10.14 Consent to Jurisdiction and Service of Process.
The Borrower irrevocably appoints each and every officer of the Borrower
as its attorneys upon whom may be served, by regular or certified mail at the
address set forth in Section 10.2 hereof, any notice, process or pleading in
any action or proceeding against it arising out of or in connection with this
Agreement or any of the other Loan Documents; and, subject to Section 10.16
the Borrower hereby (i) consents that any action or proceeding against it be
commenced and maintained in any court within the State of New Jersey or in
the United States District Court for New Jersey by service of process on any
such officer; (ii) agrees that the courts of the State of New Jersey and the
United States District Court for the District of New Jersey shall have
jurisdiction with respect to the subject matter hereof and the person of the
Borrower and the Collateral, and (iii) waives any objection that such
Borrower may now or hereafter have as to the venue of any such suit, action
or proceeding brought in such a court or that such court is an inconvenient
forum. Notwithstanding the foregoing, the Bank, in its absolute discretion
may also initiate proceedings in the courts of any other jurisdiction in
which the Borrower may be found or in which any of its properties or the
Collateral may be located.
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10.15 Indemnification.
(a) If, after receipt of any payment of all or any part of the
Obligations, the Bank is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that
such payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrower shall be liable for, and shall indemnify, defend and hold harmless
the Bank with respect to the full amount so surrendered.
(b) The Borrower shall indemnify, defend and hold harmless the Bank with
respect to any and all claims, expenses, demands, losses, costs, fines or
liabilities of any kind, including reasonable attorneys' fees and costs,
arising from or in any way related to (i) acts or conduct of the Borrower or
any of the Other Loan Parties under, pursuant to or related to this Agreement
and the other Loan Documents, (ii) Borrower's or any Other Loan Party's
breach or violation of any representation, warranty, covenant or undertaking
contained in this Agreement or the other Loan Documents, and (iii) Borrower's
or any other Loan Party's failure to comply with any or all laws, statutes,
ordinances, governmental rules, regulations or standards, whether federal,
state, or local, or court or administrative orders or decrees, including
without limitation those resulting from any Hazardous Materials or dangerous
environmental condition within, on, from, related to or affecting any real
property owned or occupied by the Borrower, unless resulting from the acts or
conduct of the Bank constituting gross negligence or willful misconduct.
(c) The provisions of this section shall survive the termination of this
Agreement and the other Loan Documents and shall be and remain effective
notwithstanding the payment of the Obligations, the cancellation of any of
the Notes, the release of any Encumbrance securing the Obligations or any
other action which the Bank may have taken in reliance upon its receipt of
such payment. Any cancellation of any of the Notes, release of any
Encumbrance or other such action shall be deemed to have been conditioned
upon any payment of the Obligations having become final and irrevocable.
10.16 Arbitration Provisions.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out
of, or relating to the Loan Documents (a "Dispute") shall be resolved by
binding arbitration conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, disputes as to
whether a matter is subject to arbitration, claims brought as class actions,
or claims arising from document executed in the future. A judgment upon the
award may be entered in any court having jurisdiction. Notwithstanding the
foregoing, this arbitration provision does not apply to disputes under or
related to Swap Agreements.
(b) All arbitration hearings shall be conducted in the city in which the
office of Bank first stated above is located. A hearing shall begin within
ninety (90) days of demand for arbitration and all hearings shall be
concluded within one hundred twenty (120) days of demand
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for arbitration. These time limitations may not be extended unless a
party shows cause for extension and then for no more than a total of sixty
(60) days. Arbitrators shall be licensed attorneys selected from the
Commercial Financial Dispute Arbitration Panel of the AAA. The parties do not
waive applicable Federal or state substantive law except as provided herein.
(c) Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any
party may exercise before or after an arbitration proceeding is brought. The
parties shall have the right to proceed in any court of proper jurisdiction
or by self-help to exercise or prosecute the following remedies, as
applicable: (i) all rights to foreclose against any real or personal property
or other security by exercising a power of sale or under applicable law by
judicial foreclosure including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation or real property and
collection of rents, set-off, and peaceful possession of personal property;
and (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding. Any claim or controversy with
regard to any party's entitlement to such remedies is a Dispute.
(d) Each party agrees that it shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right
or claim to punitive or exemplary damages they have now or which may arise in
the future in connection with any Dispute, whether the Dispute is resolved by
arbitration or judicially.
(e) The parties acknowledge that by agreeing to binding arbitration they
have irrevocably waived any right they may have to a jury trial with regard
to a Dispute.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized officers on the date first above written.
Blonder Tongue Laboratories, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
First Union National Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
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Exhibit A Revolving Line Note
Exhibit B Term Note
Exhibit 6.2(c) Borrowing Base and Loan Report
Exhibit 6.2(g) Compliance Report
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